Veolia Falls in Paris as EDF Sells Stake Below Market PriceTara Patel
Veolia Environnement SA dropped in Paris trading after Electricite de France SA offloaded its 4 percent stake in the company at below yesterday’s market close.
Veolia, Europe’s biggest water and waste company, fell 3 percent to 11.82 euros, the lowest closing level since Aug. 30, after EDF sold its holding at a 2.3 percent discount. EDF, the biggest nuclear-reactor operator, yesterday announced proceeds of 262 million euros ($355 million) from the private placement.
EDF rose 0.15 percent to 27.12 euros.
The sale follows a deal unveiled last month to split Veolia and EDF’s Dalkia energy-services company after a legal wrangle over future ownership. Separation of the utilities is a reversal of a plan by EDF Chief Executive Officer Henri Proglio when he took the helm in 2009 to develop closer ties with Veolia. He had previously headed and spent almost all his career at Veolia.
The “tough relationship” between Proglio and Veolia CEO Antoine Frerot made impossible any plan for EDF to raise its stake, Emmanuel Retif, a Raymond James analyst in Paris, said in a note. “EDF no longer had a reason to keep its” stake.
Proglio left as a director on Veolia’s board last year while EDF was suing Veolia over ownership of Dalkia. Before taking over at EDF, he told members of the French Senate that the power and water utilities would work together beyond Dalkia and may develop synergies in energy and foreign markets.
EDF today confirmed its dividend target after the deal. It will pay an interim payout of 57 euro cents a share and kept a target to pay 55 percent to 65 percent of net income excluding non-recurring items, the company said in a statement.